District employers would be barred from using a job applicant’s credit history as a factor in determining whether to hire that person under legislation now before the D.C. Council.
D.C. residents, 12 percent of whom are unemployed, “need a job; they don’t need a credit check,” Ward 1 Councilman Jim Graham said Tuesday. A recent Society for Human Resource Management survey found 47 percent of employers perform credit checks on selected job candidates while 13 percent check all candidates — most often applicants for jobs involving access to money.
» After a contingent job offer: 57 percent
» After interview but before offer: 30 percent
» Before interview: 3 percent
» Varies: 9 percent
Source: SHRM survey
The District joins at least a dozen states to eye a ban on the practice. “I’ve heard from my own constituents who have been turned down for jobs, some as unrelated to credit as contracting and selling shoes, because of their own credit issues,” Graham said. “Why put up an artificial barrier to hiring when it is already an uphill battle to find a job?”
The bill prohibits a prospective or current employer from using a consumer report “where any information contained in the report bears on the consumer’s creditworthiness, credit standing, or credit capacity for employment purposes.” There are a handful of exemptions — applicants for managerial, professional or executive positions with a financial institution, for example. The D.C. legislation is modeled after a measure idling in the U.S. House Financial Services Committee. A proposed credit check ban before the Maryland House spells out that employers may not use a credit check to deny employment, to discharge an employee, or to determine compensation. That bill also is bottled up in committee. The U.S. Chamber of Commerce has not taken a formal position on the various credit check bills, Michael Eastman, the chamber’s executive director of labor policy, told The Examiner. But generally speaking, he said, supporters have yet to explain why new laws are needed when existing civil rights statutes generally prohibit the use of any background check that would have a discriminatory effect on a protected class. “It really raises the question about the need for this legislation,” Eastman said. The SHRM survey found that current outstanding judgments, like a lawsuit, accounts in collection, bankruptcy, and a high debt-to-income ratio are most likely to work against a job candidate. The checks often delve seven or more years into a person’s credit history. “The cost of a negligent hire to a business is huge,” said Michael Aitken, SHRM’s director of government affairs.
